Zain Umer on How the UAE Became the World’s Crypto Capital

Let's talk regulations in the UAE. The UAE just rewrote the entire crypto rulebook, and across the region, regulators are moving fast on digital assets. Joining us is Zain Umer, CEO of CFC Mena and co-chair of the Mena Fintech Association's Policy and Regulations Working Group. Welcome to the studio. You helped build VARA from the ground up — what are the biggest regulatory changes we're seeing in the UAE right now?
Thank you so much for having me. The UAE has undergone significant change over the last year or so. The SCA — formerly known as ESCA — has introduced a new federal framework for crypto assets covering activities across the entire rulebook, which is very exciting and ushers in a new era for regulation across the UAE. We've seen VARA publish its Rulebook 2.0 and already update it further. We've seen the Central Bank's payment token service regulations come into effect. Across stablecoins and tokenization, there have been huge developments.
Speaking of stablecoins — under the new rules, algorithmic stablecoins and privacy-focused tokens are banned for payments. Why?
The Terra Luna collapse two years ago highlighted exactly why algorithmic stablecoins are dangerous. Privacy tokens have always been prohibited under the UAE's initial framework because of the difficulty in tracking and tracing the origins of funds. Both bans align with FATF guidance and global best practice. I think it's another sign of the robustness of the UAE's federal regulatory framework.
The UAE now also has a unified register between the SCA and VARA. What does that actually mean for a crypto company operating here?
It gives more choice and more clarity. If you're in Sharjah, Fujairah or Abu Dhabi, you naturally fall under the SCA. If you're in Dubai, you're under VARA. There's a geographical distinction. But the unified register also means that if you get a VARA license, you're automatically registered with the SCA as well — and vice versa. A joint unified framework for the UAE as a whole is very positive. It shows the regulators are working together and the country is moving in one direction.
VARA also fully rolled out the travel rule this year. How does that affect everyday crypto users?
The travel rule has been part of VARA's framework from the beginning, though implementation has taken some time. Effectively, any transaction exceeding 3,500 dirhams requires the sender to provide information on the beneficiary — who they're sending funds to. It's very similar to a standard bank transfer, where you always enter the recipient's name and IBAN. This is the crypto equivalent of that — instead of sending funds to a string of random numbers and letters, a name and ID are attached. It makes the UAE framework more robust and ensures closer alignment with FATF standards, which is critical at this stage.
Your firm helped Kraken get approved under VARA. What does that process actually look like?
We've been fortunate enough to complete just over 40 licenses over the last year or so — across VARA, the SCA, the FSRA and the UAE Central Bank. For tier-one firms like Kraken, the process is very intensive. These are global players choosing the UAE as their new home. Behind the scenes, it's very close collaboration between ourselves and these firms — we help build the compliance framework and infrastructure, the policies and procedures. But this process is only possible because of the cooperative role the regulators themselves play. The firms have the biggest role of all — they have to be willing to align with the UAE's frameworks. We bring the world's leading firms here, help them launch, and work extensively on compliance design. The regulator is the third part of that equation and has been extremely supportive throughout.
Would you describe the UAE's regulatory environment as business friendly?
I wouldn't go that far — and I say that as someone who helps companies open here every day. The UAE sometimes gets a reputation as a great place to do business but perhaps less rigorous than European or US counterparts. In crypto, I think the UAE has actually become the global hub — and I'm proud to say that. But the impressive thing is it became a hub not by lowering standards. It actually set some of the toughest standards in the world, while creating other enabling factors: banking access for crypto firms that is among the best in the world, regulators who are willing to engage and help firms navigate expectations, and a strong broader financial infrastructure. I'd say the regulations are pro-business, not necessarily business-friendly. The evidence is in the number of firms choosing the UAE as their global headquarters. That balance of robustness and openness has been struck very well.
Let's move to Saudi Arabia. Crypto trading is still effectively banned there, yet we've been talking about tokenization in real estate. How do we explain that contrast?
It's less a contrast than it appears. It comes down to how you define the crypto sector. Saudi Arabia has been very open about the fact that cryptocurrency trading — buying Bitcoin, trading derivatives or futures — remains prohibited. But digital assets is a broader term that includes tokenized representations of physical assets like real estate and financial instruments. Saudi Arabia has decided, within the wider world of digital assets, to focus on tokenized real-world assets rather than cryptocurrencies. They've launched a pilot for this and made exciting progress on tokenizing real estate. It's an initiative with a lot of potential, and Saudi Arabia is on a good pathway to benefit from blockchain technology.
What's the next big regulatory shift in this region that people aren't paying enough attention to?
The first wave was retail adoption — user-friendly platforms, the homegrown exchanges, the global players like Binance and OKX. What we're seeing now is institutional adoption accelerating in the UAE, and a much closer alignment between the payment infrastructure and the virtual asset sector. You can already pay government fees and fines in crypto, book a taxi, book a flight. You can buy an apartment in Dubai on the blockchain in five minutes rather than four months. The next wave is traditional financial instruments being tokenized and more institutions getting involved. It's a very exciting space and I think we'll see it develop significantly over the course of this year.
When can we realistically use crypto for everything — rent, bills, groceries?
As early as next year — and honestly we're closer than most people think. Right now you can get a prepaid crypto card in the UAE linked directly to your crypto wallet. I could walk outside and buy a coffee with it today and the merchant receives payment in crypto. Anyone using RAK Bank or ADIB already has the ability to buy and sell crypto directly through their bank account. Soon we'll have the ability to invest in crypto through our bank accounts too. The rules are already built. The next layer is simply user adoption increasing. By early next year, I think most people will have the option to spend in crypto for almost anything they need.